The Minnesota Department of Human Services announced Thursday that it has completed a sweeping review of nearly 5,600 high-risk Medicaid providers, a massive compliance effort that is already reshaping Minnesota’s home-care and human services industry, including many small community-based providers owned by African immigrants.
The five-month review was launched as part of Minnesota’s effort to satisfy heightened federal oversight requirements and avoid the potential loss of up to $2 billion in federal Medicaid funding.
Of the 5,583 providers required to undergo revalidation, DHS said 2,061 were successfully reapproved to continue providing services without interruption. Another 3,411 providers were notified they would be disenrolled from the Medicaid program, while 59 were referred to the department’s Office of Inspector General for additional review.
The review comes after years of mounting scrutiny over fraud and oversight failures within Minnesota’s Medicaid system, particularly in home-care and autism-related services. Federal prosecutors and state investigators have brought several high-profile cases in recent years involving allegations of fraudulent billing and misuse of public funds.
But state data released Thursday also showed that most providers facing disenrollment were not accused of criminal fraud.
According to DHS, 2,491 providers were flagged for incomplete paperwork or missing documentation, while another 916 failed verification during unannounced site visits. Only four providers were removed because of failed background studies.
State officials described the effort as both a compliance review and an attempt to rebuild public confidence in Minnesota’s Medicaid system.
“More than 1 million Minnesotans deserve to have confidence and trust in the Medicaid providers they depend on for lifesaving and life-affirming care,” DHS Deputy Commissioner Shireen Gandhi said in a statement.
DHS said providers were required to re-establish information originally submitted when they enrolled in Medicaid, including ownership disclosures, staffing information, insurance documentation, licensing records and proof that qualified workers were available to provide services.
The process also included fingerprint-based background studies for owners and unannounced site visits to confirm operations matched submitted records.
Officials said many disenrollment notices involved failures to disclose management authority, ownership changes, insurance records or staffing information, while some providers failed to provide access during site visits.
Providers receiving disenrollment notices have 60 days to appeal. DHS said providers that submit appeals and necessary documentation may regain the ability to bill Medicaid during the process to help maintain continuity of care for clients.
The scale of the disenrollments could create disruption across portions of Minnesota’s caregiving system, particularly in home-care and waiver-service programs that rely heavily on smaller providers.
Many African immigrant-owned businesses have entered Minnesota’s home-care and personal care assistance sectors over the past decade, building networks that serve seniors, people with disabilities and medically vulnerable residents in immigrant communities.
DHS said counties, Tribal agencies and managed care organizations are now working to help clients transition to new providers where necessary.
“Minnesota counties are the first point of contact for most Minnesotans who receive Medicaid services,” said Julie Ring, executive director of the Association of Minnesota Counties. “Counties are actively responding to questions from clients and even providers who have been disenrolled.”
The department said it attempted extensive outreach during the review process, including at least three written notices to providers, more than 6,500 follow-up phone calls, weekly virtual meetings, technical assistance sessions and online guidance materials.
The revalidation effort is part of a broader tightening of Medicaid oversight in Minnesota. Newly approved legislation will expand staffing within the DHS Office of Inspector General, establish a new statewide Office of Inspector General and increase funding for the Minnesota Attorney General’s Medicaid Fraud Control Unit.
Human Services Inspector General James Clark said the state is attempting to reset expectations for providers while restoring public trust in the system.
“We’re not just resetting expectations for providers, we’re also establishing a baseline for building back public trust,” Clark said.
Questions remain about how many currently active Medicaid clients may ultimately be affected by provider disenrollments, and how quickly replacement services can be arranged in areas where provider networks are limited.
DHS said it is directly contacting Medicaid recipients who receive services from providers facing disenrollment and who do not currently have case managers.
